The statement is:
True , The conversion privilege entices investors to accept a lower interest rate than would normally be the case on a straight debt issue.
Convertible debt is a loan or debt obligation from an investor that is paid with equity or stocks in a company. Convertible debt is also known as convertible loans or convertible notes.
A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares.
However, convertible bonds tend to offer a lower coupon rate or rate of return in exchange for the value of the option to convert the bond into common stock. Companies benefit since they can issue debt at lower interest rates than with traditional bond offerings. However, not all companies offer convertible bonds.
Hence , from the given scenario of the question the statement is TRUE.
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